By Melissa J. Anderson (New York City)
Last Week, the Women’s Executive Circle of New York held an event entitled The Path to the Boardroom: What you need to do today to get there tomorrow. The event, hosted by Morgan Stanley, featured a talk with Bonnie Gwin, Vice Chairman and Managing Partner, Heidrick & Struggles.
Gwin, who focuses on Director and CEO level searches at the recruiting firm, serves as a national board chair of the Make a Wish Foundation.
She began her discussion with the following advice: “When you get into board practice, whether a for-profit board or a not-for-profit board, it’s got to be something you feel passionate about.”
Uncertainty in the Boardroom
“There is a lot of activism and transparency going on, and much of it is for the good, but it’s leading to a lot of uncertainty,” she said.
According to Gwin, there are a number of changes facing boards currently as a result of Dodd Frank and other regulatory changes, having to do with proxy access and say on pay. The proxy access rule means that under certain circumstances companies will be required to mail alternate slates to shareholders. In turn, shareholders no longer will have to pay to get their slate out for a vote – now the company will have to cover the cost.
She said that last week the proxy access provision was put on hold, with the court ruling that it is not allowed, but the SEC is likely to appeal it.
Considering the new Dodd Frank rules combined with some Sarbanes Oxley provisions, she continued, “the whole panoply means there is a lot of uncertainty in the boardroom.”
Where are the Women?
“Where are the women in the boardroom?” Gwin asked. “It’s a sad fact that the numbers haven’t changed appreciably.”
According to the 2010 Public Companies Governance Study by the NACD, she pointed out, the average term length for a director is 6.8 years. “One of the reasons we’re not seeing a lot of women on boards is that not a lot of seats are changing over.”
While many non-profit boards place limits on term length for directors – on average, six years – the practice is going out of fashion for practice for for-profit boards. If for-profit boards do have a term limit, it tends to be longer – about ten years.
Additionally, she said, according to a recent Heidrick and Struggles study, about half of the Fortune 100 seek out CEOs or retired CEOs to serve as board directors, and 25 percent of Fortune 100 boards seek out CFOs or retired CFOs, with an average director age of 52.
“That right there is the number one reason we’re not seeing diversity on boards,” she explained. “They want people, who, in their view, have battle scars. They are looking for a certain level of experience.”
While the number of women on boards remains low, diversity is a growing concern. “The question I get asked the most is ‘why is that number not moving?’” she continued. “I know those companies are feeling the pressure.”
Gwin concluded, “I think there is a genuine interest in diversifying boards, but there are some impediments and I think the main reason is the flight to experience.” There just aren’t that many female CEOs, she explained, to fill board positions when they do arise, and because board limits are rare, seats don’t often open up.
Anecdotally, she added, when women are included on nominating committees, they tend to think more about building a diverse slate of candidates.
Networking can go a long way in securing a board seat. “There is a desire for warm referrals, meaning somebody knows this person. It goes back to networking. Most boards don’t use search firms.”
She continued, “I don’t think women have traditionally been as good at networking and they’re as good at asking for what they want.”
“The number one criteria… is honed business judgment,” she said. Companies are looking for someone who is seasoned and who can ask the right questions. Additionally, Gwin continued, “I often hear, particularly from women, that they were added to a board because they were on a non-profit board.”
“Build your experience in the non-profit world. If you have a passion for a charitable organization, besides being a good thing to do, also you meet people who can help you. The most important thing is to select a board for your passion – you have to come at it from an authentic place.”
Finally, Gwin urged women to reach out to people they know on boards, and ask for advice on how to get there. “Create your personal corporate brand – have someone help you develop your elevator pitch. What are the things you bring to the table?”